Airbnb’s growth doesn’t scare Priceline at all

Officials at the Priceline Group and Expedia Inc. haven’t felt compelled to jump into peer-to-peer apartment rentals despite the phenomenal growth of Airbnb over the last few years.

They are loathe to do so because of all of the legal and regulatory issues that would need to be sorted out, and the fact that the sharing economy doesn’t pose a material threat in the next few years, according to a recent report from Morningstar that touches on Priceline, Expedia, and the sharing economy.

The Morningstar report, written by senior equity analyst Dan Wasiolek, states that the competitive threat from Airbnb is “manageable for both Expedia and Priceline.”

In fact, the report estimates that Airbnb is currently adversely impacting Priceline’s and Expedia’s booking growth about one-third of a percentage point and that could reach a little more than 1 percentage point by 2019.

Hardly a doom and gloom scenario.

Commenting on the economics of vacation home and apartment rentals during the Priceline Group’s first quarter of 2015 earnings call on May 7, CEO Darren Huston said the commission levels and take rates are similar to the hotel business but “we don’t feel pressure to go lower.”

“Priceline and Expedia dominate the OTA (online travel agency) accommodation space, while Airbnb has become a meaningful presence in the market in a short amount of time,” the Morningstar report states. “We still see plenty of opportunity for all three of these players to grow, as each of their shares of the total accommodation market is still in the single digits.”